UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

/X/        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

/ /        TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT



                        Commission File Number: 00-19813

                               InfoNow Corporation
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


        Delaware                                         04-3083360
 ----------------------                      ----------------------------------
(State of incorporation)                    (I.R.S. Employer Identification No.)

            1875 Lawrence Street, Suite 1100, Denver, Colorado, 80202
                     --------------------------------------
                    (Address of principal executive offices)

                                  303-293-0212
                            -------------------------
                           (Issuer's telephone number)

Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                                 Yes  X  No
                                    -----  -----

As of November 14, 2002, there were 9,318,359 shares of the Issuer's common
stock outstanding.

Transitional Small Business Disclosure Format (Check one):    Yes     No  X
                                                                 -----  -----

<PAGE>


                               INFONOW CORPORATION

                                      INDEX

                                                                      Page  No.
                                                                      ---------
                          PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

           Unaudited Balance Sheet - September 30, 2002.......................3

           Unaudited Statements of Operations - For the Three and Nine
             Months Ended September 30, 2002 and September 30, 2001...........4

           Unaudited Statements of Cash Flows - For the Nine Months
             Ended September 30, 2002 and September 30, 2001..................5

           Notes to Unaudited Financial Statements............................6


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........11

ITEM 3.    CONTROLS AND PROCEDURES............................................21



                        PART II. OTHER INFORMATION


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K...................................22

           SIGNATURES.........................................................23

           CERTIFICATIONS.....................................................24


                                       2

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                                  PART I. FINANCIAL INFORMATION
                                  -----------------------------
Item 1.  Financial Statements

                                       INFONOW CORPORATION
                                          BALANCE SHEET
                            (In Thousands, Except Share Information)
                                           (Unaudited)

                                                                                  SEPTEMBER 30,
                                                                                      2002
                                                                                    --------
                                        ASSETS
                                        ------
CURRENT ASSETS:
    <S>                                                                            <C>
    Cash and cash equivalents                                                       $  2,384
    Accounts receivable:
          Billed, net of allowance of $37                                              1,689
          Unbilled                                                                       143
    Deferred implementation costs                                                         93
    Prepaid expenses                                                                     291
                                                                                    --------
         Total current assets                                                          4,600
                                                                                    --------

PROPERTY AND EQUIPMENT, net                                                              992

    Non-current deferred implementation costs                                             55
    Other assets and deferred charges                                                     37
                                                                                    --------

TOTAL ASSETS                                                                        $  5,684
                                                                                    ========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 ------------------------------------
CURRENT LIABILITIES:
    Notes payable and capital leases - current portion                              $    106
    Accounts payable                                                                     625
    Payroll related liabilities                                                          345
    Other liabilities                                                                    121
    Short-term deferred revenues                                                       1,566
                                                                                    --------
         Total current liabilities                                                     2,763

    Notes payable and capital leases, net of current portion                             151
    Long-term deferred revenues                                                          573

COMMITMENTS AND CONTINGENCIES (Note 2)

STOCKHOLDERS' EQUITY:
       Preferred stock, $.001 par value; 1,962,335 shares authorized:
       Series A Convertible, 213,483 shares authorized, none issued and outstanding     --
       Series B Convertible Participating, 800,000 shares authorized,
         250,000 shares issued and outstanding at September 30, 2002,
         liquidation preference of $5,000,000                                           --
    Common stock, $.001 par value; 15,000,000 shares authorized, 8,364,162 issued
         and outstanding at September 30, 2002                                             9
    Additional paid-in capital                                                        39,149
    Accumulated deficit                                                              (36,961)
                                                                                    --------
         Total stockholders' equity                                                    2,197
                                                                                    --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $  5,684
                                                                                    ========

                          See notes to unaudited financial statements.

                                                3
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<PAGE>


                               INFONOW CORPORATION
                            STATEMENTS OF OPERATIONS
                  (In Thousands, Except Per Share Information)
                                   (Unaudited)



                                        Three Months Ended    Nine Months Ended
                                        ------------------    -----------------
                                          September 30,         September 30,
                                          -------------         -------------
                                         2002       2001       2002       2001
                                         ----       ----       ----       ----
REVENUES:
    Service and other fees             $ 2,241    $ 1,985    $ 6,703    $ 5,092
    Implementation fees                    792      1,464      2,220      3,929
    License fees                            74        502        122        883
                                       -------    -------    -------    -------

        Total revenues                   3,107      3,951      9,045      9,904
                                       -------    -------    -------    -------

COST OF REVENUES                         1,537      1,528      4,540      4,609
                                       -------    -------    -------    -------

GROSS MARGIN                             1,570      2,423      4,505      5,295

OPERATING EXPENSES:

    Selling and marketing                  689      1,243      2,451      4,032
    Product development                    326        389        949      1,201
    General and administrative             652        745      1,784      2,175
                                       -------    -------    -------    -------
        Total operating expenses         1,667      2,377      5,184      7,408
                                       -------    -------    -------    -------

INCOME/(LOSS) FROM OPERATIONS              (97)        46       (679)    (2,113)

OTHER INCOME (EXPENSE):
    Interest income                          7         14         24         85
    Interest expense                        (7)       (10)       (24)       (36)
                                       -------    -------    -------    -------
        Total other income
                                          --            4       --           49
                                       -------    -------    -------    -------

NET INCOME/(LOSS)                      $   (97)   $    50    $  (679)   $(2,064)
                                       =======    =======    =======    =======

BASIC EARNINGS/(LOSS) PER
 COMMON SHARE                          $  (.01)   $   .01    $  (.08)   $  (.25)
                                       =======    =======    =======    =======

BASIC WEIGHTED AVERAGE
 COMMON SHARES OUTSTANDING               8,362      8,172      8,353      8,157
                                       =======    =======    =======    =======

DILUTED EARNINGS/(LOSS) PER
 COMMON SHARE                          $  (.01)   $   .01    $  (.08)   $  (.25)
                                       =======    =======    =======    =======

DILUTED WEIGHTED AVERAGE
 COMMON SHARES OUTSTANDING               8,362      9,219      8,353      8,157
                                       =======    =======    =======    =======


                  See notes to unaudited financial statements.

                                       4

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<CAPTION>


                                    INFONOW CORPORATION
                                 STATEMENTS OF CASH FLOWS
                                      (In Thousands)
                                        (Unaudited)



                                                                      NINE MONTHS ENDED
                                                                         SEPTEMBER 30,
                                                                        2002       2001
                                                                      -------    -------
CASH FLOWS FROM OPERATING ACTIVITIES:
    <S>                                                               <C>        <C>
    Net loss                                                          $  (679)   $(2,064)
    Adjustments to reconcile net loss to net cash provided by (used
         in) operating activities:
         Depreciation and amortization                                    762        819
         Allowance for bad debt                                           (22)        10
         Stock based compensation                                        --           35
         Bonus accrual                                                   (362)      --
         Changes in operating assets and liabilities:
             Restricted cash                                               17         59
             Accounts receivable                                         (232)      (969)
             Other current assets                                         488         24
             Other assets and deferred charges                             18        105
             Accounts payable                                             203        107
             Payroll related and other liabilities                       (107)       651
             Deferred revenue                                               5       (327)
                                                                      -------    -------
         Net cash provided by (used in) operating activities               91     (1,550)

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment                                    (42)      (414)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of stock options                               156         59
    Principal payments on debt obligations                                (80)      (132)
                                                                      -------    -------
         Net cash provided by (used in) financing activities               76        (73)

NET CHANGE IN CASH AND EQUIVALENTS                                        125     (2,037)

CASH AND EQUIVALENTS, beginning of period                               2,259      4,013
                                                                      -------    -------

CASH AND EQUIVALENTS, end of period                                   $ 2,384    $ 1,976
                                                                      =======    =======

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                                            $    18    $    36
                                                                      =======    =======

NON CASH INVESTING AND FINANCING ACTIVITIES:
    Non cash purchases of property and equipment                      $    36    $    69
                                                                      =======    =======


                       See notes to unaudited financial statements.

                                             5
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<PAGE>


                               INFONOW CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     -----------------------------------------------------------

Organization and Business Activity - InfoNow Corporation (the "Company") was
incorporated under the laws of the State of Delaware on October 29, 1990. The
Company provides Enterprise Channel Management software and managed services to
Global 2000 companies that sell locally through dealers, distributors, resellers
or branches, also known as channel partners. The Company's software and services
enable large, multi-national companies to utilize the power of the Internet to
sell to and service end customers in collaboration with their channel partners.

The accompanying financial statements of InfoNow Corporation for the three and
nine months ended September 30, 2002 and 2001 are unaudited, but in the opinion
of management, include all adjustments, consisting only of normal recurring
items, necessary for a fair presentation. Interim results are not necessarily
indicative of results that may be achieved in the future.

These financial statements should be read in conjunction with the financial
statements and notes thereto which are included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 2001. The accounting policies set
forth in those annual financial statements are the same as the accounting
policies utilized in the preparation of these financial statements, except as
modified for appropriate interim financial statement presentation.

Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid investments
with original maturity dates of three months or less to be cash equivalents. The
Company's excess cash is maintained in a money market fund.

Property and Equipment - Property and equipment are stated at cost.
Replacements, renewals and improvements are capitalized and costs for repairs
and maintenance are expensed as incurred. Depreciation is computed using the
straight-line method over estimated useful lives of three to five years.

Revenue Recognition - The company offers its software and managed services to
clients in two forms. The first (and historical) method utilizes an application
service provider ("ASP") model. Under this business model the Company sells the
right to use its software for the term of a specific agreement, and it
implements and hosts that solution to meet specific client requirements. The
revenue related to the right to use the Company's software is recognized through
monthly service fees as services are performed. The implementation fee is
deferred and recognized ratably over the longer of the expected customer life or
contract term. During the three and nine months ended September 30, 2002,
implementation fees of $356,000 and $675,000, respectively, were deferred. Of
these deferrals, $14,000 and $23,000 was recognized during the three and nine

                                       6

<PAGE>


months ended September 30, 2002, respectively. During the three and nine months
ended September 30, 2001, implementation fees of $121,000 and $296,000,
respectively, were deferred. Of these deferrals, $8,000 and $19,000 was
recognized during the three and nine months ended September 30, 2001,
respectively.

The second method of delivering our software and services is via a licensed
software with managed services model, sometimes referred to as the
license-hosted model. The Company began offering this model in 2001. Under this
model, the Company sells clients a perpetual license for its software. The
customer can install the software on their own in-house systems, or, as is most
often the case, InfoNow will host the software and perform related services for
them under a managed services agreement. Under this model, the Company
recognizes both license and implementation revenues under Statement of Position
97-2 ("SOP 97-2") on a percentage-of-completion basis, and it recognizes
software maintenance fees and monthly service fees as earned. Losses are
recognized immediately if projected direct costs exceed anticipated revenues.

For certain projects, the Company invoices for work yet to be performed,
pursuant to the contractual terms of the arrangement. These pre-billed amounts
totaled $243,000 at September 30, 2002 and are reflected as short-term deferred
revenues in the accompanying balance sheet.

New Accounting Pronouncements - In July 2001 the Financial Accounting Standards
Board ("FASB") issued SFAS No. 142 "Goodwill and Other Intangible Assets." SFAS
No. 142 requires the use of a non-amortization approach to account for purchased
goodwill and certain indefinite life intangibles. Under a non-amortization
approach, goodwill and certain indefinite life intangibles will not be amortized
into results of operations, but instead will be reviewed for impairment and
written down and charged to results of operations only in the periods in which
the recorded value of goodwill and certain intangibles is more than its fair
value. The adoption of SFAS No. 142 on January 1, 2002 had no impact on the
Company's financial statements.

The Company will adopt SFAS 143, "Accounting for Asset Retirement Obligations",
no later than January 1, 2003. Under SFAS 143, the fair value of a liability for
an asset retirement obligation covered under the scope of SFAS 143 would be
recognized in the period in which the liability is incurred, with an offsetting
increase in the carrying amount of the related long-lived asset. Over time, the
liability would be accreted to its present value, and the capitalized cost would
be depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity would either settle the obligation for its recorded amount
or incur a gain or loss upon settlement. The Company is still studying this
newly-issued standard to determine, among other things, whether it has any asset
retirement obligations which are covered under the scope of SFAS 143. The effect
to the Company of adopting this standard, if any, has not yet been determined.

In August 2001 the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived assets." SFAS No. 144 provides new guidance on the
recognition of impairment losses on long-lived assets to be held and used or to
be disposed of and also broadens the definition of what constitutes a
discontinued operation and how the results of a discontinued operation are to be
measured and presented. The adoption of SFAS No. 144 on January 1, 2002 had no
impact on the Company's financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
Under SFAS No. 145, gains and losses from extinguishment of debt shall be
classified as extraordinary items only if they meet certain criteria for
classification as extraordinary items in APB Opinion No. 30. SFAS No. 145 also
amends SFAS No. 13, Accounting for Leases, to require sale-leaseback accounting
for certain lease modifications that have economic effects that are similar to

                                       7

<PAGE>


sale-leaseback transactions and also makes various technical corrections to
existing pronouncements that are not substantive in nature. The provisions of
SFAS No. 145 related to the rescission of SFAS No. 4 are effective in fiscal
years beginning after May 15, 2002, with early application encouraged. The
provisions of SFAS No. 145 related to SFAS No. 13 are effective for transactions
occurring after May 15, 2002. All other provisions of SFAS No. 145 are effective
for financial statements issued on or after May 15, 2002. This amendment and the
other issues addressed in SFAS No. 145 did not have a material effect on the
Company's financial position or results of operations.

In May 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities". SFAS No. 146, addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including certain Costs Incurred in a Restructuring)". SFAS No. 146 requires
that a liability for an exit cost or disposal activity be recognized when the
liability is incurred, whereas under EITF No. 94-3, a liability was recognized
at the date of an entity's commitment to an exit plan. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. The provisions of SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The adoption of SFAS 146 is not expected to have a material impact
on the Company's financial position or results of operations.

Income Taxes - The Company accounts for its tax liabilities in accordance with
SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires recognition of
deferred tax assets and liabilities for the expected future income tax
consequences of transactions. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. Net
deferred tax assets are then reduced by a valuation allowance for amounts which
do not satisfy the realization criteria of SFAS No. 109. As a result of the
valuation allowance, the Company had no net deferred tax assets at September 30,
2002 or September 30, 2001.

Stock Compensation Expense - The Company records its stock compensation expense
in accordance with SFAS No. 123, Accounting for Stock-Based Compensation. SFAS
No. 123 specifies a fair value based method to measure compensation cost of
issued stock options and similar instruments issued using a Black-Scholes model
or other comparable method. However, the Company has elected an option under
SFAS No. 123 that allows a Company to continue to recognize compensation cost
for employees and directors in accordance with the guidance in APB No. 25 and
disclose the pro forma results of operations as if SFAS No. 123 had been applied
to the financial statements. Transactions in which the Company issues stock
options or other equity instruments to acquire goods or services from
non-employees are accounted for in accordance with SFAS No. 123. The Company
accounts for stock compensation for employees via the intrinsic value method and
for non-employees via the fair value method. The intrinsic value method results
in no compensation expense because the market value and strike price of the
stock option grant are the same on the grant date.

During the nine months ended September 30, 2002, the Company received $156,000
of proceeds from the exercise of 104,746 options by former employees pursuant to
the terms of the original options.

Net Loss Per Common Share - The loss per share is presented in accordance with
the provisions of SFAS No. 128, Earnings Per Share ("EPS"). Basic EPS is
calculated by dividing the income or loss available to common stockholders by

                                       8

<PAGE>


the weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Basic and diluted EPS were the same for the three months ended September 30,
2002 and the nine months ended September 30, 2002 and 2001 because the Company
had losses from operations in those periods and the effect of all potential
common stock issuances was anti-dilutive. For the three and nine months ended
September 30, 2002, 4,248,293 stock options and 201,387 warrants were excluded
from the diluted EPS calculation because their effect would have been
anti-dilutive. For the nine months ended September 30, 2001, 3,722,569 stock
options and 221,387 warrants were excluded from the diluted EPS computation
because their effect would have been anti-dilutive. Convertible preferred shares
that, if converted, would result in 954,197 shares of common stock were also
excluded from the diluted EPS computation for the three months ended September
30, 2002 and the nine months ended September 30, 2002 and 2001 because their
effect would have been anti-dilutive. For the three months ended September 30,
2001, the convertible preferred shares were assumed to be converted into 950,570
shares of common stock for purposes of the diluted EPS calculation since their
effect was dilutive.

Stock options, warrants outstanding and their equivalents are included in
diluted EPS computations through the "treasury stock method" unless they are
anti-dilutive. Convertible securities are included in diluted EPS computations
through the "if converted" method unless they are anti-dilutive. Common share
equivalents are excluded from the computations in loss periods, as their effect
would be anti-dilutive.

Reclassifications - Certain amounts in the prior year financial statements have
been reclassified to conform to the current year classifications. These
reclassifications were due to the Company adding more specific line item detail
to its financial statements in the current year.

Concentrations of Credit Risk - Financial instruments which potentially subject
the Company to concentrations of credit risk are accounts receivable. The
Company's customers are primarily large multi-national entities located
throughout the U.S. The Company grants credit, generally without collateral, to
these customers under specific contractual terms. The Company has not
experienced any material losses related to its accounts receivable to date.

During the three and nine months ended September 30, 2002, the Company received
$1,713,000, or 55%, and $4,676,000, or 52%, respectively, of its revenue from
one global organization. Prior to the third quarter of 2002, this entity had
three business units that were customers of the Company. However, due to a
merger of this entity with an existing customer, this organization now has five
business units that are counted as five customers of the Company. No other
customer accounted for more than 10% of the Company's revenue during the three
and nine months ended September 30, 2002. As of September 30, 2002, that same
organization accounted for approximately 56%, or $943,000, of the Company's net
accounts receivable balance. The loss of this client, reduction in revenues from
this client, or its inability or failure to pay would have a material adverse
impact on the Company's financial condition and results of operations. During
the three months ended September 30, 2001, the Company received 38%, or
$1,499,000, of its revenues from this client, and 11%, or $424,000, from another
client. No other customers accounted for more than 10% of revenue during the
three months ended September 30, 2001. During the nine months ending September
30, 2001, the Company received 31%, or $4,364,000, of its revenue from this
client. No other customers accounted for more than 10% of the Company's revenue
during the nine months ended September 30, 2001.

                                       9

<PAGE>


Segment Information - The Company operates in a single reportable segment and
all revenues from customers are primarily from the sale of its Enterprise
Channel Management software and services.

2.   COMMITMENTS AND CONTINGENCIES
     -----------------------------

Through September 30, 2002, the Company leased approximately 27,000 square feet
of office space under two leases at an average rate of approximately $14.00 per
square foot. The leases were with unrelated parties and one of the leases was a
sublease that terminated on September 30, 2002. The Company renegotiated both
leases and, effective October 1, 2002, both leases were combined into one new
lease agreement, covering the same office space. Under the new lease, the
average rate per square foot increased to $16.50 per square foot for the period
between October 1, 2002 and June 30, 2003. The rate increases to $17.00 per
square foot from July 2003 through September 2005 and $18.00 per square foot
from October 2005 through September 2007, when the lease expires. The new lease
contains a refurbishment allowance of $326,000, of which the Company utilized
approximately $35,000 to improve the premises and $18,000 to offset a portion of
its rent obligation for September 2002. The Company expects to use the remaining
$273,000 to offset future rent obligations from October 2002 through May 2003.
Rent expense, net of the refurbishment allowance, will be recognized on a
straight-line basis over the term of the lease.

From time to time the Company may be involved in litigation that arises in the
normal course of business operations. As of the date of this report, the Company
is not a party to any litigation.

The Company received correspondence in 2001 from Murex Licensing Corporation
asserting that certain technologies employed by the Company infringe on patents
owned by Murex. During 2002 the Company has received further correspondence from
Murex stating Murex's belief that InfoNow is required to enter into a license
agreement with Murex for the use of Murex's technology. While the Company is
continuing to evaluate Murex's position, at this point it believes that the
patent infringement and license agreement obligation claims asserted in the
correspondence from Murex are without merit, and the Company intends to defend
against them vigorously should Murex bring a formal claim or litigation against
the Company. The Company has executed a nondisclosure agreement and has
exchanged information with Murex which may facilitate resolution of this matter.
Notwithstanding the existence of meritorious defenses, any litigation over the
scope and application of patents or similar intellectual property claims could
involve significant costs of defense, risks and uncertainties.

3.   SUBSEQUENT EVENTS
     -----------------

On November 14, 2002 the Company executed a two year contract with an existing
client for the Company's Point-of-Sale solution. InfoNow's Channel
Point-of-Sales solution enables channel-focused companies to track end-customer
sales through the channel and identify customer names, parent companies and
affiliations. Data collected from sales transactions can then be used to focus
sales and marketing efforts, better reward sales personnel for both direct and
indirect sales, and gain critical visibility into sales channels. The total
contract value is $1,500,000, which will be recognized over the term of the
contract consistent with the Company's revenue recognition policies described
above.

On October 24, 2002, Putnam OTC and Emerging Growth Fund (the "Putnam OTC Fund")
converted 200,000 shares of the Company's Series B Convertible Participating
Preferred Stock into 763,358 shares of the Company's Common Stock, and on
October 25, 2002, Putnam Emerging Information Sciences Trust (the "Putnam Trust
Fund") converted 50,000 shares of the Company's Series B Convertible
Participating Preferred Stock into 190,839 shares of the Company's common stock.
In the aggregate, the shares received by the Putnam OTC Fund and the Putnam
Trust Fund in the conversion represented approximately 10.24% of the Company's
outstanding shares of Common Stock at September 30, 2002. These were the only
owners of the Company's Series B Convertible Participating Preferred Stock.
Accordingly, there are no other shares of the Company's Series B Convertible
Participating Preferred Stock issued and outstanding.

                                       10

<PAGE>


Item 2.    Management's Discussion and Analysis or Plan of Operation.
-------    ----------------------------------------------------------
The following discussion and analysis of the financial condition and results of
operations for InfoNow should be read in conjunction with our unaudited
financial statements and related notes appearing elsewhere in this report. This
discussion contains statements that are not historical fact. These
forward-looking statements are based on our current expectations, assumptions,
estimates and projections about our industry and business and include statements
about markets for our software and services, planned development of products and
anticipated expense and revenue levels. These forward-looking statements contain
words such as "anticipate", "believe", "plan", "expect" or similar language and
are intended to qualify for the safe harbor protections provided under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to business and economic risks. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of many factors, including those set forth in this discussion and in
other documents we have filed with the Securities and Exchange Commission.

General Information and Overview

We provide Enterprise Channel Management solutions in the form of software and
services primarily to Global 2000 companies that sell through dealers,
distributors, agents, branches or resellers (collectively referred to as channel
partners). Our software and services help companies use the power of the
Internet to sell to and service end-customers by effectively managing channel
partners worldwide, providing partners and end-customers with information about
their products and services, connecting end-customers with channel partners,
capturing and managing leads through the sales cycle, promoting and selling a
company's branded products and services online, and providing meaningful
insights into their customers and the partners serving them. This in turn
enables companies to increase revenues, lower operating costs and deliver a
significant return on investment.

As of September 30, 2002, we had 45 clients versus the 56 we had as of September
30, 2001. We have and may continue to experience decreases in our client count
for various reasons, including client consolidation. Despite the reduction in
the number of clients, our contracted managed service fees increased from
$752,000 per month as of September 30, 2001 to $824,000 per month as of
September 30, 2002. Most of our clients are Global 2000 companies with extensive
channel partner networks. Our clients include Apple, Avaya, Bank of America, The
Hartford, Hewlett Packard, Lexmark, Maytag, Visa, Vision Service Plan and
Wachovia Corporation.

We offer our solutions to clients in two forms. The first (and historical)
method utilizes an application service provider ("ASP") model. Under this
business model we sell the right to use our software for the term of a specific
agreement, and we implement and host that solution to meet specific client
requirements. The revenue related to the right to use our software is recognized
through monthly service fees as services are performed. The implementation fee
and related direct costs are deferred and recognized ratably over the longer of
the expected customer life or contract term. Since most of our contracts range
from one to three years in duration, the customer life is typically the longer
deferral period and is estimated to be three years. This estimate is based on a
number of factors including customer turnover, the rate of change for the
technology underlying our solutions and the expectation that our customers will
continue to convert from the ASP model to the license-hosted model, under which
software, implementation fees and direct costs are not deferred and are
recognized on a percentage of completion basis.

                                       11

<PAGE>


The second method of delivering our software and services is via a licensed
software and managed services model, sometimes referred to as our license-hosted
model. We began offering this model in 2001 and we expect it to be our
predominant methodology going forward. Under this model, we sell our clients a
perpetual license for our software. They can install our software on their own
in-house systems, or we will host the software and perform related services
under a managed services agreement. Under this model, we recognize both license
and implementation revenues under Statement of Position 97-2 ("SOP 97-2") on a
percentage-of-completion basis, and we recognize software maintenance fees and
monthly service fees as earned.

We began offering the license-hosted model in order to add flexibility in
offering our software and services and expand the addressable market for our
technology by meeting the needs of companies who wish to purchase our software.
Customers and prospects sometimes prefer a license-hosted arrangement as it
enables them to fund these projects using capital budgets, potentially reduces
the total cost of ownership, and offers a method for ensuring their long-term
right to use the software.

Our services are generally sold with annual or multi-year contracts. The initial
term of these agreements is typically one to three years and they are renewable
upon mutual agreement between InfoNow and the client.

A typical contract could include six separate revenue producing components: a
software license fee, an implementation fee, a managed service fee, a variable
monthly transaction fee, a software maintenance fee, and other fees.

License/Implementation fees:

     o    The software license fee applies to all configured application
          software and related functionality used in the client's application.

     o    The implementation fee applies to the configuration of a tailored,
          client-specific software interface to the system and the design and
          configuration of client business rules and databases.

Monthly service fees:

     o    The managed service fee applies to hosting and provision of the
          service, as well as performance of routine maintenance to client
          databases and core systems.

     o    The variable monthly transaction fee includes charges for system usage
          in excess of contracted thresholds.

     o    The software maintenance fee (for customers utilizing a
          licensed-hosted model), which is typically billed one year in advance
          and amortized into revenue on a monthly basis, includes updates to the
          client's software and support.

Other fees:

     o    Variable fees included under this heading are pass-through charges for
          voice recordings, faxes, geocoding, and telecommunications charges.

Revenue from software maintenance fees, recurring managed service fees and
variable monthly fees is recognized as the services are performed. Revenue from
software license fees and implementation fees is recognized ratably over either
the expected term of the client relationship (for ASP contracts) or the
implementation period on a percentage of completion basis (for licensed-hosted

                                       12

<PAGE>


contracts). During 2002, we began to recognize commission expense for our sales
representatives at the time of contract execution or as services are performed,
depending upon the revenue components of the contract. The historical method
generally was to recognize commission expense at the time of contract execution.
This change is based on a change in commission policy that allows for recovery
of commission payments if the client receives a refund. The new commission plan
resulted in $103,000 and $194,000 of lower commission expense during the three
and nine months ended September 30, 2002, respectively, than would have been
recognized using the historical methodology.


The following table summarizes the distribution of our employees as of September
30, 2002 and September 30, 2001:

                                              September 30,       September 30,
                                                  2002                2001

Staff related to the Cost of Revenues              71                  57

Selling and Marketing                              15                  25

Product Development                                12                  14

General and Administrative                         12                  12

   Total Employees                                110                 108

Included in the table above are 96 full-time employees and 14 temporary
employees at September 30, 2002, and 107 full-time employees and one part-time
employee at September 30, 2001.


Results of Operations

Comparison of the Three Months Ended September 30, 2002 with the Three Months
Ended September 30, 2001.

Revenues. Our revenues consist primarily of implementation fees, license fees
and monthly service fees from new and existing customers. Total revenues
decreased by $844,000, or 21%, to $3,107,000 for the three month period ended
September 30, 2002 from $3,951,000 for the same period in the previous year.

Service Fees - Monthly service fees were $2,197,000 during the three months
ended September 30, 2002, an increase of $267,000, or 14%, from $1,930,000
during the three months ended September 30, 2001. This increase is net of
$133,000 in lost monthly service fees due to customer terminations.
Approximately $225,000 of the increase is the result of the managed service fees
associated with the $10 million contract we signed during the second quarter of
2001, while the remaining $175,000 of the increase was generated by additional
services sold to new and existing clients. Monthly service fees comprised 71% of
total revenue during the third quarter of 2002, compared to 49% during the same
period a year earlier.

Implementation Fees - Revenues generated from implementation fees during the
three months ended September 30, 2002 decreased by $672,000, or 46%, to $792,000
from $1,464,000 during the three months ended September 30, 2001. This decrease
is primarily attributable to a $396,000 reduction in revenue recognition related
to contracts with implementation fees that were deferred in previous years under
the ASP model. The remaining $276,000 decrease in implementation fees was caused
by a decline in the sales of our products and services.

                                       13

<PAGE>


License Fees - License fees were $74,000 during the three months ended September
30, 2002, a decrease of $428,000 from the $502,000 of license fees during the
three months ended September 30, 2001. The decrease is attributable to a decline
in the number of new contracts with license fee components in 2002. License fees
represented approximately 2% of total revenue during the third quarter of 2002
and 13% of revenue during the third quarter of 2001. We anticipate that a higher
percentage of contracts will be executed under license-hosted arrangements as it
becomes our predominant business model over time. Therefore, we expect an
increased portion of our future revenues to be generated by the sales of our
licensed software.

Other Fees - Other fees decreased by $11,000, or 20%, to $44,000 during the
third quarter of 2002 from $55,000 during the third quarter of 2001. The
decrease in other revenues is attributable to a decrease in the number of
contracts with charges for voice recordings, faxes, geocoding and
telecommunications charges, as well as a reduction in interactive voice response
transaction volume.

To date, we have recognized total revenue of $4,494,000 on the $10 million
contract, consisting of $3,151,000 in managed service fees, $1,072,000 in
implementation fees and $271,000 in license fees.

Cost of Revenues. Our cost of revenues includes technical personnel salaries and
related personnel costs, data royalties, software costs, depreciation for server
equipment, reimbursable expenses such as telecommunications and contract labor
related to specific projects, co-location facility fees and other direct costs
related to operating our data centers, as well as the recognition of previously
deferred implementation expenses. Cost of revenues increased to 49% of revenues
for the three months ended September 30, 2002 from 39% of revenues for the three
months ended September 30, 2001. The increase is attributable to the fact that
our cost of sales did not decrease in proportion to the decline in revenue
discussed above primarily because we increased staffing levels during the second
half of 2001 and first half of 2002 in order to support the growth in our
business and those staffing levels have been maintained in anticipation of
continued future growth. Total cost of revenues increased by $9,000, or 1%, to
$1,537,000 during the third quarter of 2002 from $1,528,000 during the third
quarter of 2001. $61,000 of the increase in our cost of revenues is a result of
an increase in personnel and personnel support costs due to the hiring of
additional staff to implement, maintain and support services to our clients. In
addition, our data center costs increased $55,000 primarily as a result of
increased software costs and data royalties incurred to expand the
infrastructure for delivering our services. We also experienced a $34,000
increase in the recognition of implementation expense on contracts that were
deferred under ASP arrangements. The increases in our cost of sales associated
with personnel, data center costs and implementation expense were partially
offset by a $73,000 reduction in bonus expense. In addition, contract labor
costs decreased $68,000 as a result of the increase in personnel and software,
which reduced the need for outside consulting. The decline in business activity
also contributed to the reduction in contract labor costs.

Selling and Marketing Expenses. Selling and marketing expenses consist of sales,
pre-sales, marketing and business development personnel costs and related
expenses, travel and entertainment, sales commissions, and advertising and
promotion costs. These costs decreased to 22% of revenues for the three months
ended September 30, 2002 from 31% of revenues for the three months ended
September 30, 2001. The total amount of selling and marketing expenses decreased
by $554,000, or 45%, to $689,000 during the third quarter of 2002 from
$1,243,000 during the third quarter of 2001. The change is partially
attributable to a $210,000 decrease in personnel related costs due to a
reduction in the number of sales and marketing personnel. In addition,
commission expense decreased by $131,000 as a result of lower sales levels and
the commission policy change. We also experienced an $85,000 reduction in public

                                       14

<PAGE>


relations and advertising and promotion consulting costs, as well as a $66,000
decrease in travel and entertainment expenses. Also contributing to the decrease
in selling and marketing expenses was a $44,000 decrease in costs associated
with our outsourced lead generation efforts and an $18,000 decrease in trade
show expenses.

Product Development Expenses. Product development expenses consist of time spent
on development of our Enterprise Channel Management software that is not
specifically associated with a client contract and consist primarily of salaries
and related costs and subcontracted costs. For the three months ended September
30, 2002, product development expenses decreased $63,000, or 16%, to $326,000
from $389,000 for the three months ended September 30, 2001. During the third
quarter of 2002 we experienced a $39,000 reduction in bonus expense and a
$17,000 reduction in contract labor costs. In addition, personnel and related
personnel support costs decreased $7,000 due to lower staffing levels. Product
development costs in relation to revenue remained flat at 10% of revenue for the
quarters ended September 30, 2002 and 2001.

General and Administrative Expenses. General and administrative expenses relate
to the personnel costs of our executive management, finance, investor relations,
human resources and other corporate functions, general expenses such as legal
and accounting fees, insurance and costs related to our facilities. These costs
increased to 21% of revenues for the three months ended September 30, 2002 from
19% of revenues for the three months ended September 30, 2001. The total amount
of general and administrative costs over the same periods decreased $93,000, or
12%, to $652,000 during the third quarter of 2002 from $745,000 during the third
quarter of 2001. $109,000 of the decrease in general and administrative costs
was a result of lower bonus expenses. We also experienced a $22,000 decrease in
travel costs, as well as a $14,000 decrease in legal, accounting and other
professional fees during the third quarter of 2002. Partially offsetting the
decreases in general and administrative expenses related to bonuses, travel
costs and professional fees was $52,000 of increases associated primarily with
our facilities and insurance costs.

Non-Operating Income (Expense). We had no net non-operating income during the
three months ended September 30, 2002, compared to net non-operating income of
$4,000 for the three months ended September 30, 2001. The reduction of $4,000 is
primarily attributable to lower interest income on cash and cash equivalents
resulting from lower interest rates during the third quarter of 2002 compared to
the third quarter of 2001. Our funds earned interest at a rate of approximately
1.3% during the quarter ended September 30, 2002 compared to 3.2% during the
quarter ended September 30, 2001. See "Liquidity and Capital Resources" below
for an explanation of the use of cash and cash equivalents during the periods
presented for 2002.

Net Income/Loss. Net loss for the three months ended September 30, 2002 was
$97,000 compared to net income of $50,000 for the three months ended September
30, 2001, a $147,000 decrease. This decrease is primarily attributable to an
$844,000, or 21%, decrease in total revenues, which was partially offset by a
$697,000, or 18%, decrease in total expenses for the quarter ended September 30,
2002, compared to the quarter ended September 30, 2001, as discussed above.

Comparison of the Nine Months Ended September 30, 2002 with the Nine Months
Ended September 30, 2001.

Revenues. Total revenues decreased by $859,000 to $9,045,000 for the nine-month
period ended September 30, 2002 from $9,904,000 for the same period in the
previous year.

Service Fees - Monthly service fees were $6,578,000 during the nine months ended
September 30, 2002, an increase of $1,670,000, or 34%, from $4,908,000 during
the nine months ended September 30, 2001. This increase is net of $323,000 in

                                       15

<PAGE>


lost monthly service fees due to customer terminations. Approximately $1,578,000
of the increase is the result of the $10 million contract we secured during the
second quarter of 2001, while the remaining $415,000 of the increase was
generated by additional sales to new and existing clients. Monthly service fees
comprised 73% of total revenue during the nine months ended September 30, 2002,
compared to 50% during the same period a year earlier.

Implementation Fees - Revenues generated from implementation fees during the
nine months ended September 30, 2002 decreased by $1,709,000, or 43%, to
$2,220,000 from $3,929,000 during the nine months ended September 30, 2001. This
decrease is primarily attributable to a $941,000 reduction in implementation
fees caused by lower sales of our products and services. The decrease in
implementation fees was also caused by a $768,000 decline in the recognition of
previously deferred revenue.

License Fees - License fees were $122,000 during the nine months ended September
30, 2002, a decrease of $761,000 from the $883,000 of license fees during the
nine months ended September 30, 2001. The decrease is attributable to a decline
in the number of contracts with license fee components in 2002. License fees
represented approximately 1% of total revenue during the nine months ended
September 30, 2002 and 9% of revenue during the nine months ended September 30,
2001. We anticipate that a higher percentage of contracts will be executed under
license-hosted arrangements as it becomes our predominant business model over
time. Therefore, we expect an increased portion of our future revenues to be
generated by the sales of our licensed software.

Other Fees - Other fees decreased by $59,000, or 32%, to $125,000 during the
nine months ended September 30, 2002 from $184,000 during the nine months ended
September 30, 2001. The decrease in other revenues is attributable to a decrease
in the number of contracts with charges for voice recordings, faxes, geocoding
and telecommunications charges, as well as a reduction in interactive voice
response transaction volume.

Cost of Revenues. The cost of revenues increased to 50% of revenues for the nine
months ended September 30, 2002 from 47% of revenues for the nine months ended
September 30, 2001. The total cost of revenues decreased by $69,000, or 1%, to
$4,540,000 during the nine months ended September 30, 2002 from $4,609,000
during the nine months ended September 30, 2001. Contract labor costs decreased
$188,000 due to an increase in personnel and software, which reduced the need
for outside consulting. The decline in business activity also contributed to the
reduction on contract labor costs. In addition, bonus expense decreased $147,000
primarily as a result of the reversal of the 2001 bonus accrual. We also
experienced a $45,000 decline in bad debt expense, a $36,000 reduction in the
recognition of implementation expense on contracts that were deferred under ASP
arrangements, and a $4,000 reduction in travel costs. The decreases in our cost
of sales associated with contract labor, bonuses, bad debt expense,
implementation expense and travel costs were partially offset by a $216,000
increase in our personnel and personnel support costs due to the hiring of
additional personnel in the second half of 2001 and the first half of 2002 to
implement, maintain and support services to our clients. Our data center costs
also increased by $135,000 primarily due to increased software costs and data
royalties as we continued to expand the infrastructure for delivering our
services.

Selling and Marketing Expenses. Selling and marketing expenses decreased to 27%
of revenues for the nine months ended September 30, 2002 from 41% of revenues
for the nine months ended September 30, 2001. The total amount of selling and
marketing expenses decreased by $1,581,000, or 39%, to $2,451,000 during the
nine months ended September 30, 2002 from $4,032,000 during the nine months
ended September 30, 2001. The change is partially attributable to a $770,000

                                       16

<PAGE>


decrease in personnel related costs due primarily to a reduction in the number
of sales and marketing personnel. We also experienced a $297,000, or 49%,
decrease in public relations and advertising and promotion consulting costs and
a $205,000 decrease in commissions due to lower sales levels and the commission
policy change. Also contributing to the reduction in selling and marketing
expenses was a $193,000 decrease in travel costs, a $100,000 decline in trade
show expenses, and a $69,000 decrease in bonuses as a result of the reversal of
the 2001 bonus accrual. The decreases in selling and marketing expenses related
to personnel, consulting, commissions, travel costs, trade show expenses,
commissions, and bonuses were partially offset by a $53,000 increase in costs
associated with our outsourced lead generation efforts.

Product Development Expenses. For the nine months ended September 30, 2002,
product development expenses decreased $252,000, or 21%, to $949,000 from
$1,201,000 for the nine months ended September 30, 2001. During the nine months
ended September 30, 2002 we experienced a $113,000 reduction in bonus expense
mainly as a result of the reversal of the 2001 bonus accrual. In addition,
contract labor costs decreased by $60,000. Personnel and related personnel
support costs decreased $53,000 due to lower staffing levels during the nine
months ended September 30, 2002 compared to the nine months ended September 30,
2001. Travel expenses also decreased by $26,000. Product development costs
decreased to 10% of revenue for the nine months ended September 30, 2002 from
12% of revenue for the nine months ended September 30, 2001.

General and Administrative Expenses. General and administrative expenses
decreased to 20% of revenues for the nine months ended September 30, 2002 from
22% of revenues for the nine months ended September 30, 2001. The total amount
of general and administrative costs over the same periods decreased $391,000, or
18%, to $1,784,000 during the first nine months of 2002 from $2,175,000 during
the first nine months of 2001. $332,000 of the decrease in general and
administrative costs was primarily a result of the reversal of the 2001 bonus
accrual. We also experienced a $105,000 decrease in personnel related costs
during the nine months ended September 30, 2002, which was primarily
attributable to lower staffing levels throughout 2002, as well as a reduction in
salary continuation payments for terminated employees. In addition, travel
expenses decreased $68,000. The decreases in general and administrative expenses
related to bonuses, personnel and travel costs were partially offset by
increases in facilities costs, investor relations expenses and professional fees
of $78,000, $28,000 and $8,000, respectively.

Provision for Income Tax Expenses. InfoNow has paid no income taxes since its
inception and has not recorded a provision for income taxes due to valuation
allowances provided against net deferred tax assets, which consist primarily of
operating loss carryforwards.

Non-Operating Income (Expense). We had no net non-operating income during the
nine months ended September 30, 2002, compared to net non-operating income of
$49,000 for the nine months ended September 30, 2001. The reduction of $49,000
is primarily attributable to lower interest income on cash and cash equivalents
resulting from lower interest rates during the first nine months of 2002
compared to the first nine months of 2001. Our funds earned interest at a rate
of approximately 1.0% during the first nine months of 2002 compared to 3.6%
during the first nine months of 2001.

Net Loss. Net loss for the nine months ended September 30, 2002 was $679,000
compared to $2,064,000 for the nine months ended September 30, 2001, a
$1,385,000 decrease. This decrease is primarily attributable to a $2,244,000, or
19%, decrease in total expenses, which was partially offset by a $859,000
decrease in total revenues for the nine months ended September 30, 2002,
compared to the nine months ended September 30, 2001, as discussed above.

                                       17

<PAGE>


Liquidity and Capital Resources

InfoNow has financed its operations primarily through the placements of private
equity securities and, to a lesser extent, through borrowing and equipment
leasing arrangements. We have received a total of approximately $13,800,000 from
private offerings and have received an additional $2,667,000 from the exercise
of stock options and warrants since we began offering our channel management
solutions in 1996. In February 2002, we secured a bank credit facility with both
a $1,000,000 revolving line of credit to support future operating needs of the
company and a $1,000,000 equipment facility to support future investing needs of
the organization. We have not drawn on either the revolver or the equipment
facility. The bank credit facility requires that we meet various covenants. We
failed to meet certain of the financial covenants in the months of March 2002
through June 2002. We have obtained waivers for the instances of non-compliance
from March 2002 through June 2002. In addition, the bank has revised its
financial covenants based on our current business environment and our business
plan. We are not permitted to draw on the bank credit facility if we are out of
compliance with any of the covenants. As of the date of this report, we are in
compliance with all covenants.

We had cash and cash equivalents of $2,384,000 at September 30, 2002, compared
to $2,259,000 at December 31, 2001. The increase of $125,000 is due to $156,000
of cash proceeds from stock option exercises and $91,000 of cash generated by
our operating activities, which were partially offset by principal payments on
debt obligations and capital expenditures of $80,000 and $42,000, respectively.

Net cash generated by operating activities during the nine months ended
September 30, 2002 was $91,000, compared to net cash used in operating
activities of $1,550,000 during the nine months ended September 30, 2001. The
change of $1,641,000 is primarily due to a $1,385,000 decrease in our net loss
as well as changes in working capital and non-cash charges.

Cash used in investing activities decreased to $42,000 for the nine months ended
September 30, 2002, compared to cash used in investing activities of $414,000
for the nine months ended September 30, 2001. The cash used in investing
activities during both periods was primarily related to the purchase of computer
hardware and software for both personnel and our data centers. We had adequate
capacity to support current business activity and, therefore, capital
expenditures were lower during the first nine months of 2002 than during the
first nine months of 2001.

Net cash provided by financing activities during the nine months ended September
30, 2002 was $76,000, which consisted of $156,000 in proceeds received from the
exercise of stock options, net of $80,000 of principal payments on debt
obligations. Net cash used in financing activities during the nine months ended
September 30, 2001 was $73,000, consisting of $132,000 of principal payments on
debt obligations net of $59,000 in proceeds received from the exercise of stock
options.

Variation in the timing of our cash receipts and disbursements can significantly
impact our overall cash flow for a given period and there can be no assurance
that our current cash balance will be sufficient to fund operations.

If we believe it is advisable, we may seek additional funding to continue our
operations. Our ability to successfully complete an offering to obtain
additional funding is dependent on a number of factors. There can be no
assurances that we can successfully complete an equity or debt placement, or
that a placement can be concluded on the terms and conditions that would be
acceptable to us.

                                       18

<PAGE>
<TABLE>
<CAPTION>


The following table summarizes the Company's contractual payments and
obligations by period (amounts in thousands):

Contractual Obligations                                             Payment Due by Period

                                           Total        Less Than 1 year    1-3 years    4 - 5 years     After 5 years
<S>                                      <C>              <C>                <C>          <C>             <C>
Capital Lease Obligations                $    291         $    125           $   166      $       -       $     -

Operating Leases                            2,095              186               930            979             -

Total Contractual Cash Obligations       $  2,386         $    311           $ 1,096      $     979       $     -


Through September 2002, we leased approximately 27,000 square feet of office
space under two leases at an average rate of approximately $14.00 per square
foot. The leases were with unrelated parties and one of the leases was a
sublease that terminated on September 30, 2002. The Company renegotiated both
leases and, effective October 1, 2002, both leases were combined into one new
lease agreement, covering the same office space. Under the new lease, the
average rate per square foot increased to $16.50 per square foot for the period
between October 1, 2002 and June 30, 2003. The rate increases to $17.00 per
square foot from July 2003 through September 2005 and $18.00 per square foot
from October 2005 through September 2007, when the lease expires. The new lease
contains a refurbishment allowance of $326,000, of which we utilized
approximately $35,000 to improve the premises and $18,000 to offset a portion of
our rent obligation in September 2002. We expect to use the remaining $273,000
to offset future rent obligations from October 2002 through May 2003. In the
Contractual Obligations table above, the Operating Leases commitments are net of
the utilization of the remaining refurbishment allowance to offset rent
payments.

Related Business Risks and Assumptions
--------------------------------------

Our actual results may vary materially from the forward-looking statements made
in this report, which have been made pursuant to the Private Securities
Litigation Reform Act of 1995. We intend that such statements be subject to the
safe harbor provisions of the Securities Act of 1933 and the Securities Exchange
Act of 1934. Our forward-looking statements include the plans and objectives of
management for future operations and relate to a variety of factors, including
management's assumptions about our ability to:

     o    Enhance market acceptance of our software and services;

     o    Retain existing customers and related managed service fees, expand
          services and revenues to existing customers, and attract new
          customers;

     o    Maintain sales levels to existing customers despite consolidation
          among our clients;

     o    Continue to sell our software and services in a challenging economic
          environment;

     o    Accurately forecast and meet demands for our services, including our
          ability to maintain technical performance of the systems as new
          clients are added;

     o    Maintain our ability to serve new and existing customers;

     o    Improve our operational and financial systems in order to address
          planned growth in our operations;

     o    Maintain pricing and adequate profit margins on our products and
          services;

     o    Retain and attract qualified technical, sales and other key personnel;

     o    Develop and protect products and enhancements to our software and
          services and control development costs of those enhancements;

     o    Manage our affairs to avoid litigation;

     o    Operate our business in accordance with our operating budget;

                                       19
</TABLE>

<PAGE>


     o    Respond to competitive threats; and

     o    Raise additional capital, if needed.

Our assumptions are based on judgments with respect to, among other things,
future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our ability to control.

We believe that the assumptions underlying our forward-looking statements are
reasonable. However, our assumptions may prove to be inaccurate and therefore
there can be no assurance that the results contemplated in forward-looking
statements will be realized, particularly in light of our increasing reliance on
one major customer. You should not regard any statements made in this report on
Form 10-QSB as a representation by InfoNow or any other person that we will
achieve our objectives.

We utilize two Internet data centers maintained by Inflow, Inc. to provide
services to our customers. The data centers are housed in two separate
facilities, one in Denver, Colorado and one in Thornton, Colorado. These
facilities have safeguard protections such as a fire detection and suppression
system, redundant telecommunications access and 24-hour systems maintenance
support. We also maintain off-site storage of backups. In May 2002 Inflow
informed us that, as part of their restructuring, they would shut down four of
their 17 data centers, including a facility in Denver that housed one of our
data processing operations. As a result, in August 2002 we substantially
completed the relocation of our data center equipment to a different site, in
Thornton, Colorado.

Two of our large clients merged during the third quarter of 2002, creating one
global organization that made up 52% of our revenue during the nine months ended
September 30, 2002. Prior to the merger, one of the constituent entities in the
merger was our largest client and made up 46% of our revenue during the first
nine months of 2002. We are currently negotiating contract renewals with this
client. The effects that the merger and the renewal negotiation will have on our
future results are currently uncertain. Notwithstanding the merger and renewal
negotiation, we continue to enhance the business relationship with our largest
client.

We received correspondence in 2001 from Murex Licensing Corporation asserting
that certain technologies employed by us infringe on patents owned by Murex.
During the first half of 2002 we received further correspondence from Murex,
which stated their belief that InfoNow is required to enter into a license
agreement with them for the use of their technology. While we are continuing to
evaluate Murex's position, at this point we believe that the patent infringement
and license agreement obligation claims asserted in the correspondence from
Murex are without merit, and we intend to defend against them vigorously should
Murex bring a formal claim or litigation against us. We have executed a
nondisclosure agreement and we have exchanged information with Murex that may
facilitate resolution of this matter. Notwithstanding the existence of
meritorious defenses, any litigation over the scope and application of patents
or similar intellectual property claims could involve significant costs of
defense, risks and uncertainties.

Our shares are currently listed on The Nasdaq SmallCap Market. This listing is
dependent upon us maintaining certain minimum listing standards, including,
among others, minimum bid price and stockholders' equity standards. Between July
16, 2002 and August 26, 2002 our stock traded for 30 consecutive business days
below the $1.00 minimum bid price (based on the 4:00 p.m. close). As a result,
we received a deficiency notice from the Nasdaq's Listing Qualifications

                                       20

<PAGE>


Department advising that we had been afforded a "grace" period of 180 days to
regain compliance with the minimum bid price requirement. In order to achieve
compliance during the grace period for bid price, we must demonstrate compliance
with this standard for a minimum of 10 consecutive business days prior to
February 24, 2003. Because our stockholders' equity balance of $2,197,000 at
September 30, 2002 was below the $2,500,000 minimum requirement, we are in
violation of the equity standard for continued listing on the Nasdaq SmallCap
Market. As a result, we expect to receive a deficiency letter from Nasdaq
indicating we are out of compliance with the minimum stockholders' equity
requirement. As mentioned during our third quarter conference call, our outlook
for the fourth quarter of 2002 is positive and we expect to have stockholders'
equity of greater than $2,500,000 at year-end 2002. In the event that Nasdaq
initiates delisting proceedings against us as a result of the foregoing
deficiencies, we expect to engage in appropriate communications with Nasdaq in
order to maintain the listing of our shares of common stock on the Nasdaq
SmallCap Market. There can be no assurance, however, that we will meet our
financial projections or that Nasdaq will not delist our shares of common stock.
If our common stock is delisted, trading in our common stock would then be
conducted in the over-the-counter market on the OTC Bulletin Board, and we would
become subject to the penny stock rules maintained by the Commission. These
rules impose additional sales practice requirements on broker-dealers before our
stock could be sold to the customers of broker dealers. The additional sales
practice requirements could materially adversely affect the willingness or
ability of broker-dealers to sell our common stock. As a result it may be
difficult to sell shares or obtain accurate quotations as to the price of our
shares. In addition, should we deem it advisable, it may be more difficult to
obtain additional equity financing needed for future expansion of our operations
due to the liquidity concerns of potential investors.

For a more comprehensive discussion of the risk factors associated with our
business, please refer to our Annual Report filed with the Securities and
Exchange Commission on Form 10-KSB for the fiscal year ended December 31, 2001.

Item 3.    Controls and Procedures.
-------    ------------------------
Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information required to be included in the Company's periodic
Securities and Exchange Commission filings relating to the Company (including
its consolidated subsidiaries). There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these internal controls subsequent to the date of our most recent evaluation.

                                       21

<PAGE>


                           PART II. OTHER INFORMATION
                           --------------------------

Item 6.   Exhibits and Reports on Form 8-K
-------   --------------------------------

     (a)  Exhibits

          None.

     (b)  Reports on Form 8-K.

          On August 14, 2002 the Company filed a Form 8-K to report the Chief
          Executive Officer and Chief Financial Officer certification of the
          Company's Form 10-QSB for the quarter ended June 30, 2002, as required
          by Section 906 of the Sarbanes-Oxley Act of 2002.

          On August 28, 2002 the Company filed a Form 8-K to report that it
          received correspondence from Nasdaq informing the Company that it has
          until February 24, 2003 to regain compliance with the Nasdaq's minimum
          bid price standards for continued listing on The Nasdaq SmallCap
          Market.

                                       22

<PAGE>


                                   SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                            INFONOW CORPORATION



Date:  November 14, 2002                    By:  /s/  Michael W. Johnson
                                               -------------------------------
                                                      Michael W. Johnson,
                                                      Chief Executive Officer



Date                   Title                              Signature
----                   -----                              ---------

November 14, 2002      Chief Financial Officer and        /s/  Harold R. Herbst
                       Executive Vice President           ---------------------
                       (Principal Financial Officer)           Harold R. Herbst


November 14, 2002      Vice President, Controller and     /s/  James L. Medina
                       Treasurer                          ---------------------
                       (Principal Accounting Officer)          James L. Medina


                                       23

<PAGE>


CERTIFICATIONS

I, Michael W. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of InfoNow Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/  Michael W. Johnson
-----------------------------
     Michael W. Johnson
     Chief Executive Officer

                                       24

<PAGE>


CERTIFICATIONS


I, Harold R. Herbst, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of InfoNow Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/  Harold R. Herbst
-----------------------------
     Harold R. Herbst
     Chief Financial Officer


                                       25